South Korea has unveiled plans for at least $880bn (£666bn) of investments to build out the country's chip manufacturing and artificial intelligence (AI) capabilities in the coming years, President Lee Jae-myung announced on Monday.
The plan, part of the country's so-called Three Mega Projects, aims to develop new chip production hubs, data centres and robotics technology. Lee said the initiative is intended to rejuvenate economies outside the capital Seoul, where most advanced factories are currently concentrated. "We must secure the core elements of AI faster than any other country," Lee said during a televised event alongside the leaders of Samsung and SK Hynix, the country's two largest chipmakers. "Semiconductors, physical AI, and AI data centres are the triple axis for a great leap forward."
“South Korea unveils $880bn investment plan to build chip and AI infrastructure, aiming to outpace regional rivals.”
The announcement comes as regional rivals Taiwan, China and Japan are investing heavily in chip factories and other technologies, driven by the AI boom pushing up demand for semiconductors. Samsung and SK Group, which count AI chip giant Nvidia among their customers, have been among the biggest beneficiaries of the surge in spending on AI infrastructure.
Lee earlier described the project as a matter of "survival" for the country to address the decline in rural areas due to the concentration of industries in Seoul. "Now, we must break this long-standing cycle of discrimination and marginalisation - not only for the sake of justice and equity, but also to ensure sustainable and inclusive growth," he wrote in a statement.
The surge in demand for chips to power AI has led to a global shortage of semiconductors, sending prices higher. Last week, Apple and Microsoft raised the prices of some of their devices due to higher costs of components. US tech giants including Google, Amazon and Meta said they will spend $650bn into the technology this year.
SK Hynix's stock market valuation topped $1tn in May, driven by the boom in AI data centres. However, some investors have raised concerns about the huge amounts of money being poured into AI, which has triggered some shares to slide in recent days.